As soon as the affairs of the company are fully wound up the liquidator shall make an account of the winding up, showing how it has been conducted and the property of the company has been disposed of. The liquidator shall call a general meeting and lay such account before it, giving any explanation thereof. Thereafter, the liquidator sends a copy of the account to the registrar of companies and shall also make a return of the holding of the meeting and of its
date. The registrar on receiving the account and the return mentioned above shall immediately register them and on the expiration of three months from the registration of the return the company shall be deemed to be dissolved (Art. 273).
Creditors voluntary winding up
This procedure is used to facilitate the distribution of all available assets of an insolvent company to its creditors and thereafter the company ceases to exist by dissolution. According to Article 276 the company shall cause a meeting of the creditors to be summoned for the day on which the meeting at which the resolution for voluntary winding up is to be proposed. The directors for the company shall lay before the meeting a full statement of the position of the company’s affairs together with a list of the creditors and the estimated amount of their claims, and appoint one of them to preside at the said meeting.
A meeting of the company members is also convened with the purpose of passing the winding up resolution and appointing a liquidator. As soon as the affairs of the company are fully wound up the liquidator shall make up an account of the winding up, showing how the winding up has been conducted and the property of the company has been disposed of, and thereupon shall call a general meeting of the company and a meeting of the creditors for the
purpose of laying the account before them and giving any explanation thereof (Art. 283). The procedure then followed in the case of a members’ voluntary liquidation is that of informing the registrar of companies and registering the decision in the companies file.
After a charge over the assets of a company has been placed by a creditor, such creditor may appoint a receiver with the purpose of facilitating the sale of the company’s assets, subject to the charge and discharge of debt out of the proceeds of the sale. As soon as the receiver realises the charged asset and provider account to his appointer and the
company, he is discharged. The company debtor, however, in contradiction to the winding up procedures described above, remains in existence.
Usually the document (agreement) signed between the company debtor and the creditor creating the charge includes all powers to the extent thereof and the degree of supervision of the receiver.
Company arrangements and reconstructions
According to Article 198 of the Act where a compromise or arrangement is proposed between a
company and its creditors or any class of them, or between the company and its members, the court may
on the application of the company, a creditor, a member, or – in the case of a company being wound up – the liquidator, order a meeting of the creditors, or the members to be summoned in such manner as the court directs.
If the majority in number represented by three quarters in value of the creditors or members present and voting at the meeting agree to any compromise or arrangement, such compromise or arrangement shall be binding or all the creditors or members (Art. 198).
Such order shall have no effect until an office copy of the order has been delivered to the registrar of companies for registration. Such procedure is frequently used to facilitate the financial restructuring of the company to effect
mergers and reorganization of group of companies, thus taking advantage of favorable tax treatment of
reorganization. Upon approval of a reorganization and restructuring scheme by the court, the whole process
may be completed within weeks, thus offering a flexible and swift process.
The Cyprus Companies Act covering all aspects of restructuring and insolvency law in Cyprus is a perfect translation of the corresponding UK Law provisions dating back to the 1950s. In today’s economic circumstances it is more than
certain that many provisions will be challenged and many issues litigated in the Cyprus court which in its turn will move the institutions involved to seek and prepare a more modern insolvency legal framework assisting the rescue of corporate debtors and helping enterprises overcome obstacles.